Why AppLovin Stock Skyrocketed to a New All-Time High Today at Over $500 Per Share

The Motley FoolFeb 14, 2025 12:41 AM

Shares of digital advertising company AppLovin (NASDAQ: APP) absolutely skyrocketed on Thursday after the company smashed expectations with its financial report for the fourth quarter of 2024. As of 11 a.m. ET, AppLovin stock was up 31% and had hit an all-time high at over $500 per share.

The growth rate just accelerated

Only founded in 2011, AppLovin now has a market capitalization of over $160 billion as of today. The company managed to generate revenue of $4.7 billion in 2024, which was up 43% from 2023. And the amazing thing is that the growth rate accelerated in Q4, hitting 44%. In third quarter, revenue was only up by 39% year over year. And management had only guided for 32% growth for Q4 -- simply put, top-line expectations were smashed.

It's hard to truly appreciate just how efficient AppLovin's growth has been. Its software helps app companies get discovered and monetized. The company's software revenue jumped a stunning 73% year over year in Q4 and much of the growth dropped to the bottom line. It had Q4 net income of $599 million, which represents a profit margin of nearly 44%.

At the start of 2023, AppLovin stock traded below $10 per share as investors questioned its future. But extraordinary software revenue growth and cost management has unlocked an incredible investment.

AppLovin is executing extremely well

I believe the compelling aspect of AppLovin today is that management is taking its success in mobile gaming and looking to new growth verticals, including e-commerce and connected TV. In short, its addressable market is expanding rapidly, which could sustain its growth rate for some time.

Trading at over 30 times sales, AppLovin stock isn't cheap. But it's hard to think of a profitable company with better growth momentum right now. Its e-commerce launch is off to a strong start, which could sustain growth -- management expects about 30% growth in the upcoming first quarter. In conclusion, everything looks good for AppLovin right now and I believe its shareholders should enjoy the moment.

Reviewed byTony

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